ECON 2304 Lecture Notes - Lecture 18: Farmer Jack, Demand Curve, Marginal Product
26 Nov 2016
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Factors of production and factor markets: factors of production inputs used to produce goods and services. 70% of us national income paid to workers. Capital equipment and structures used to produce goods and services: prices and quantities of these inputs are determined by supply & demand in factor markets. Derived demand: markets for the factors of produce are like markets for good & services except. Demand for a factor of production is a derived demand. Derived demand derived from a firm"s decision to supply a good in. Two assumptions another market: all markets are competitive. In the market for the produce it produces. In the labor market: firms care only about maximizing profits. Each firm"s supply of output and demand for inputs are derived from this goal. Example: farmer jack: jack sells wheat in perfectly competitive market, jack hires workers in a perfectly competitive labor market, jack maximizes profits by thinking at the margin.
